16th April 2025: Purbeck Insurance Services, the UK’s only provider of personal guarantee insurance to business owners is warning SMEs to be prepared to sign a personal guarantee for a major part of the loan secured through the Growth Guarantee Scheme. This follows feedback from customers who expected their personal liability to extend to just 30% of the loan.
The warning comes as the UK Government confirms that The British Business Bank will expand its Growth Guarantee Scheme by £500 million. This scheme provides the lender with a 70% government-backed guarantee against loans or other types of finance.
Todd Davison, MD of Purbeck Insurance Services said: “We welcome the boost to the Growth Guarantee Scheme which is proving a lifeline for many firms. Its predecessor - the Recovery Loan Scheme - supported £4bn of lending, but business owners should be under no illusion about who the government-backed guarantee protects – it’s the lender not the business. This has come as a shock to a number of businesses we have supported.
“Business owners securing funding via the scheme will still, in most cases need to sign a personal guarantee for the full extent of the loan and they will be liable for that debt if they default on payments. It is only once the lender has exhausted all avenues including the personal guarantee, to get the debt repaid that the lender can claim on the government-backed guarantee.
“The additional finance pledged through the Growth Guarantee Scheme could not come at a more crucial time for SMEs but it remains vital that business owners fully understand the risks of signing a personal guarantee and take steps to mitigate those risks.”
